December 9, 2025 | 03:33 pm
TEMPO.CO, Jakarta - The National Banks Association (Perbanas) supports the Financial Services Authority's (OJK) initiative to encourage the consolidation or merger of banks categorized under Core Capital Group I (KBMI I). Perbanas Chair Hery Gunardi believes that such consolidation is essential to make these banks more efficient, productive, and competitive.
KBMI I represents the banking category with the lowest core capital, defined as banks holding capital up to Rp6 trillion. The other categories are:
- KBMI II: Core capital from Rp6 trillion to Rp14 trillion.
- KBMI III: Core capital from Rp14 trillion to Rp70 trillion.
- KBMI IV: Core capital exceeding Rp70 trillion.
Hery noted that the current capital condition of KBMI I banks appears "quite good," with an average Capital Adequacy Ratio (CAR) around 31.5 percent. However, a key area of concern is their relatively high Loan at Risk (LAR), which stands at 12.32 percent.
"However, its LAR is quite high, meaning [there is an issue with] the ability to manage its credit protocols properly," Hery explained during the Bisnis Indonesia Group Conference 2025 at Hotel Raffles, Jakarta, on Monday, December 8, 2025.
Drawing on his industry experience, Hery stressed that size is a critical factor in determining a bank's performance. He pointed out that banks with assets below Rp10 trillion typically struggle to achieve sufficient growth and adequate margins.
He argued that smaller banks will inevitably lose market share to larger KBMI IV banks, which benefit from massive scale in terms of branch and ATM networks, development of mobile banking platforms, and employee capacity.
In terms of efficiency, larger banks significantly outperform the KBMI I group. The Operational Costs to Operational Income Ratio (BOPO) for KBMI I banks reaches almost 83 percent, whereas the ratio for KBMI IV banks is notably lower at just 64 percent.
"This is what we think needs to be addressed, so we welcome the OJK's invitation to truly make this consolidation happen in the future," he concluded.
OJK's Strategic Agenda
The OJK had previously urged KBMI I banks to upgrade either by strengthening capital organically or undergoing consolidation to build resilience and capacity within the banking sector. OJK believes these small banks have considerable opportunity to scale up their business.
"In order to strengthen the structure and resilience of the national banking sector and support sustainable economic growth, OJK views the strengthening of fundamentals and consolidation of KBMI I banks as a strategic agenda that needs to be pursued in a directed and prudent manner," said OJK's Executive Director of Banking Supervision, Dian Ediana Rae, in a press conference on Friday, November 7, 2025.
According to Dian, this strengthening is critical given the current dynamics of information technology, accelerated banking digitization, global economic uncertainty, and increasing cyber attack risks. She disclosed that OJK formally conveyed the need for fundamental strengthening and consolidation to the KBMI I banks via a letter at the end of October.
Read: Indonesia's Foreign Exchange Reserves Climb to US$150.1 Billion in November 2025
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